Monthly Archives: October 2013

Employers Canceling Health Insurance Coverage – First Do No Harm

PPACA offers expanded coverage to the currently uninsured by subsidizing the cost of health insurance plans from the private market (via Exchanges) and by expanding MediCaid.   Low-income employees currently covered by their small business group insurance plan, are now seeking affordable coverage for their dependents through these new avenues.

These insured employees reaching out to the Exchanges for subsidized dependent coverage are quickly finding out their family is ineligible for federal help solely due to the existence of their employer group insurance plan.   Once clamoring for employer based group health insurance, the employees are now demanding the employer plan be canceled so that Exchange subsidies can be accessed for their entire family.

Many employers may see this as an easy out of the benefit business.   With no barriers to the individual market, the employer may see this as an option for everyone.   Could it be that easy?  Low-income subsidy-eligible employees and their families head to the Exchange while the rest of the group hits the guaranteed coverage options within the individual market?   The answer is not so straightforward.  Any professional benefit agent could point out the obvious problems.

Everyday issues that might be considered include:

  •  Employees age 65 and over need time to prepare for a switch to Medicare and all it entails.
  • Employees with household incomes below FPL levels of 250%-150% need to understand their private Exchange policy will not be issued as applied for.
  • Everyone needs to know new policies both in and out of the Exchanges will be providing substantially reduced provider lists.
  • Those seeking subsidies might get more than they asked for.   Part or all of the family may find they have fallen into a MediCaid plan (MediCal in CA) with no way back to the private market.
  • Individuals, especially those with specific needs, have no guarantee that providers, services, therapies and drugs will be available to them.
  • Employers need to understand the tax consequences of such a move.

Individual needs aside, the markets inside the Exchanges are a mess at best.   Quoted benefits and costs are merely estimates.   Benefits outlined are merely a promise of coverage written on a government spreadsheet.   Most States haven’t even produced specimen policies for the professional to inspect for detail.

The private market is functioning, but only as fast as the State will approve plans for sale.   It could be December before we get a glimpse of what the breadth of private options really looks like.  Do we really want to make decisions based only on what can be seen today?

Before any employer writes that cancellation letter, they need to remember why they had the group plan in the first place.   Canceling coverage and dropping people into an unknown myriad of issues is not going to further your goal to attract and retain quality employees.

Small Employers – The ACA Creates The New Employee Benefit!

Small Employers – The ACA Creates The New Employee Benefit!

Paula L. Wilson, RHU, REBC

Paula L. Wilson, Inc.


Californians are heading to the internet in search of the golden ticket to low cost insurance through Covered California.  Covered CA is the name of California’s version of the Affordable Care Act  (ACA).   In most cases, they are finding this search leads only to confusion.  Instead of an easy road to clear answers, everyone is finding out that the ACA is nothing more than a set of prepackaged insurance policies with all of the same confusing definitions and options they have encountered in the past.    On the phones they find Navigators are merely community organizations staffed to enroll people.  Navigators are not allowed to make any recommendations and lack the expertise, knowledge and liability coverage to advise anyone on such an important issue.

There’s also a dirty little secret everyone is uncovering.  The law disqualifies employees and most dependents from subsidized coverage if they are eligible to enroll in a group insurance plan – regardless of the cost (with a few exceptions).    For this reason, small employers already struggling to keep up with increasing health insurance costs, may opt to cancel their group insurance and open the floodgates for employees and family members to enroll in the exchanges and receive the hefty premium and benefit subsidies that may be available to them.

Although this option WILL NOT BE THE BEST ROUTE FOR MOST SMALL EMPLOYERS, it could work for many.  Before an employer makes the decision to cancel their group insurance, they are cautioned to consider:

Tax Implications

  • Review Federal Mandate Compliance
  • Eligibility for the Small Business Tax Credit
  • Income/Subsidy level of the employees
  • Special needs of employees/dependents
  • Review the coverage and access loopholes of Exchange plans with a qualified agent
  • Review their overall benefit and compensation strategy with a benefits specialist

The employer that cancels his group insurance program has just cancelled the one golden handcuff that may have created and continued employee loyalty over the years.  What will be the new golden handcuff for the employee?

Providing your employees with access to the professional counseling of a licensed insurance agent is not only a free benefit, but also the best kept secret of the ACA.    Insurance agents continue to provide employers and individuals with free insurance advice regardless of whether it comes direct from the open market or through a vehicle like Covered California.  Allowing employees to meet with a qualified agent during work hours will ensure that golden handcuff feeling that employees have come to expect in employee benefits.

Employees not eligible for subsidies or willing to accept the reduced PPO and HMO networks of Covered CA will appreciate the opportunity to look at this new post ACA world of options.   It’s a new landscape of options and a thoughtful look at all of your options is in order!

Whether you are providing this service to all employees after canceling your group insurance plan, or offering it to those employees already employed but not eligible for your group insurance, it’s a great free employee benefit.  Small businesses that don’t currently offer group coverage will find they can now provide guaranteed coverage for their employees with the free services of their very own agent!

This service with a revised compensation and ancillary benefit structure could be a win-win for your small business.   Your employees will appreciate the fact that you have done your research and found the most qualified, experienced and trusted advisor for them.   Use caution when using any internet agent or agency, the purpose of using an agent is to provide you employees personal service.   Impersonal online order takers are not what is called for here.

Employers are still in the best position to provide access to the right medical coverage whether through their traditional group insurance plan or ACA compliant plans.

IMPORTANT NOTE:  Unlike Navigators, insurance agents provide ongoing support and carry liability insurance to make sure they give you the right advice. There is no recourse for bad advice or ongoing service provided if you proceed directly to Covered California to apply for your coverage.